Real Estate: Where’s The Bottom?
Posted by admin | Real Estate | Posted on February 18th, 2009
In recent months, U.S. property market has seen its fair share of turbulent weather housing prices continue to fall. While the Federal Reserve has taken significant steps to make borrowing cheaper, interest rates remain artificially high as the troubled financial sector continues to record write downs. So far, only one quarter of the IMF estimated $ 1 trillion in sub-prime losses have been reported, which means that the mortgages not be affordable for a long time, even if homes continue to decline in value . According to the index case of housing prices Schiller, covering 20 major metropolitan areas, home prices are depressing at an annual rate of 12.7%, although the pace of decline is accelerating. To the extent that the owners continue to lose equity, loans will become increasingly difficult to obtain.
Since this circuit works itself out, by a regional phenomenon has begun to emerge. Although housing prices dropped moderately in the U.S. the story does not end there. Despite reduced forecasts for economic growth and related inflationary pressures (which are much more diffused throughout the economy) several metropolitan areas have been more solid, which explains the vote in the last two cuts in types by the regional presidents of the Federal Reserve of Dallas and Philadelphia, respectively. Part of his reasoning is based on work against what they see as a misconception about the scope of the Fed’s powers among many investors, namely that the central bank is the sole agent responsible for assisting the market appeal . Political jockeying has and will continue to play a role in their decisions, especially in the climate of an election year, but their votes represent the resistance of many areas of the U.S. which still has growth. In Charlottesville, North Carolina to Austin, Texas, many metropolitan areas continue to develop rapidly, seemingly insulated from much of the speculation and predatory lending that has defined extensions of the USA. While some of the hardest hit markets in the Southwest such as Phoenix, Arizona and Las Vegas will take considerable time to recover, some price correction was inevitable. This is partially due to property value spirals in recent years, without any corresponding increase in infrastructure and demand. In markets where growth has been steady, housing prices have remained relatively stable.
If the federal government steps in and helps re-negotiate the estimated more than two million sub-prime mortgages expected to default in the course of 2008, prices may stabilize more quickly. Political closing ranks in a show of solidarity is likely to be reluctant to make a bipartisan effort priority, while the presidential race remains the focus of attention, which makes the investment in the short and medium term can be more profitable in markets where prices have overcorrected and stable markets. This is because no government based on freeze mortgage interest rates may be less favorable than the current rates, which are strongly negative. Moreover, refinancing remains available climate change. In any case, the worst may not be a lot more than America, but some places have weathered the past eight months relatively unscathed.